Fate of His 22,000 Members Hangs in Balance
TORONTO, ONTARIO--(Marketwire - March 29, 2010) - John Morrison, founder and creator of the beach volleyball scene at Ashbridge's Bay beach, has been forbidden from communicating with key City officials before Council's crucial decision this Wednesday on whether to exercise the five-year renewal option on his latest contract or to end his 14-year run on the beach and sign a contract with the Ontario Volleyball Association (OVA).
Morrison, who started from scratch 14 years ago at Ashbridge's Bay Beach and has built the largest recreational beach volleyball league in North America right here in Toronto, was told by the City late last week that he had to stop all communication with public office holders.
"Just when we were finally making some headway on the matter we got shut down," said Morrison, who was setting up meetings with Councillors to discuss the upcoming decision that has his fate and the fate of his 22,000 members hanging in the balance. He was about to have the first of his meetings when communication was halted.
Morrison was informed by the City that he and the OVA are not permitted to communicate with Councillors or with Mayor David Miller during an open RFP process.
According to the City's lobbyist registry, however, the Mayor, key Beaches Councillor Sandra Bussin and several other Councillors had already met with the OVA to discuss the matter when the City shut all communication down.
"It's incredibly unfair to our 22,000 members," said Morrison. "I feel absolutely helpless not being allowed to talk to the decision makers who will hold our destiny in their hands on Wednesday, especially when the other side got to have their say, face to face, with such key people."
Morrison said it is particularly frustrating to be forbidden from talking to Councillor Bussin when she has yet to meet with him to hear his side of this story and when there is so much riding on this decision for the Beach community.
According to Morrison, the economic impact of his sizable membership, which took 14 years for him to build, is now estimated to be more than a million dollars a year in the Beaches. There are many beach area businesses who have benefited increasingly for the last decade-and-a-half from the money his members spend and those businesses could feel the effect if the City doesn't exercise the option on Morrison's contract.
Morrison said he has offered for almost two months now to immediately pay his company's outstanding balance to the City in full and sign his five-year contract renewal but the City has so far refused to accept payment and move forward.
PLEASE SEE FOLLOWING PAGES FOR DETAILED SUMMARY OF THE ISSUE
Summary of The Issue
This is not about John Morrison's company owing the City money and not paying. It's about the City not accepting the full payment he keeps offering to the City in order to move forward with his contract renewal.
To be absolutely clear, John Morrison informed the City in a letter to the General Manager of Parks, Forestry and Recreation on February 11, 2010, that his company was prepared to pay its outstanding balance of $327,875 in full, in the form of a certified cheque, and move forward with its five-year contract renewal. The City has so far refused to accept payment and move forward.
Morrison has never received a response to that letter, which he was instructed to send by City staff the day before it was sent.
Morrison also emphasized that, from the beginning of this matter, it was never about owing money that his company wouldn't or couldn't pay. It was a matter of City staff effectively making it impossible over a period of months for him and his company to take the necessary steps to provide payment.
Morrison's first five-year contract term under his company's latest RFP expired on September 30, 2009. There is an option for a second five-year contract renewal at the sole discretion of the General Manager of Parks, Forestry and Recreation.
The $327,875 consists of the funding for a future City capital project ($210,000 to renovate the Woodbine Beach bathing station), $5,000 in recycling fees and the final three $37,625 rent cheques (September, October and November) from contract number one that have been sitting for months with Morrison's accounting firm ready to be forwarded to the City when this whole matter gets resolved.
Morrison's company met all of its rent obligations from the beginning of the contract in 2005 right through to September, 2009.
Morrison's company also paid $125,000 in full to the City for a playground the City had agreed to build at Ashbridge's Bay beach by September, 2009. That playground has still not been built by the City.
This issue originally unfolded when The City added financial commitments for the two capital projects (the playground and the bathing station), over and above already increased rent fees, into Morrison's latest contract.
This had never been attempted before and it put the both Morrison and the City into uncharted waters.
From the beginning, Morrison recommended putting the payments for one of the two capital projects into the first five-year term of the contract he had won and putting the payments for the second capital project into the second five-year term he would be eligible for under renewal. The City refused and insisted on putting the payments for both capital projects into the first five-year contract.
Morrison told the City that based on maximum revenue streams from beach volleyball at Ashbridge's Bay, this was going to be too onerous in the first five years. The City was adamant about putting the payments for both capital projects into the first five-year term.
Morrison's company's cash flows, as he predicted, were not enough to fund the second capital project (the Woodbine Beach bathing station renovation) by the end of the first five-year contract in 2009.
Knowing his company had already paid in full for a first City project that was late, that his revenues suffered due to mass garbage and a lack of services that alienated his players during the City strike, that we were going through the worst financial crisis in modern history and that his company had a spotless track record with the City for so many years, Morrison asked to have the payment for the City's future bathing station project deferred until the next year. The City refused.
That left him with only one option and that was to obtain financing, so future cash flows could cover the cost of the project up front.
However, every time Morrison and his staff tried to get the City to reveal the terms of the next contract and what the fees would be, the City stated that it would be up to the General Manager of Parks, Forestry and Recreation to decide and that it would only be revealed if and when the General Manager decided to renew the contract.
This made it effectively impossible for Morrison to obtain the necessary financing to fund the second capital project and pay for it with 2010 cash flows. The financial institutions he spoke to required the very information the City would not provide, as well as a letter of intent, which the City would also not provide. As a result, Morrison's company was unable to meet the scheduled payments for the City's second future capital project.
The City informed media last week that it had given Morrison's company two months to address the outstanding balance after his contract expired on September 30, 2009 but, again, the reality is that City staff effectively made it impossible to do so in those two months by refusing to reveal what the company's annual rent fees would be moving forward, effectively preventing Morrison from obtaining short term financing and paying off that balance.
The City informed Morrison in December, 2009, that it would not exercise the option to renew his contract and then issued an RFP on January 25, 2010, for beach volleyball at Ashbridge's Bay.
Morrison's company was told by City staff that it was not eligible to bid on the RFP because it owed the City money and his company did not bid on the RFP as a result. The RFP yielded only one lone bid (the OVA's) that council votes on this Wednesday. All previous beach volleyball RFP's had multiple bidders.
City staff finally informed Morrison's company on January 25, 2010, what its rent fees would be under a renewed contract from 2010 to 2014 and that it was still possible to pay its balance off in full in the form of a certified cheque and sign the five-year renewal. That was reiterated by staff on February 10, 2010.
Upon finally obtaining this information from the City, Morrison immediately obtained the necessary commitments for financing and has been in a position to pay the City in full ever since. Again, the City has so far refused to accept payment and move forward.
Morrison's company, TESSC Inc., better known as Not So Pro Sports, created the beach volleyball revenue stream for the City 14 years ago and since then has paid continually increasing fees to the City that total more than $2 million.
This includes over $1 million in the last five years and over $230,000 in 2009, including capital project contributions.
That is the most money ever paid to the City for beach volleyball in a single year.
The current situation unfolded, according to Morrison, completely because of the second future capital project (the $210,000 renovation of the Woodbine Beach bathing station) that was written into the first five-year term of his latest contract.
Morrison said he and his company were put into an impossible position by the City when they were not allowed to put that $210,000 bathing station payment over to 2010.
When staff would also not reveal in 2009 what his annual rent fees would be under his contract renewal for 2010 to 2014, it effectively prevented him from obtaining the financing necessary to pay for the City's future capital project up front and cover it with 2010 cash flows.
"They put me into a catch-22 situation," said Morrison.
There were only two ways to deal with this: by moving the bathing station payment to 2010 or by obtaining financing to pay for it in 2009. He said staff effectively made it impossible to do either.
That is, until January 25, 2010, when staff finally informed Morrison's company what its fees would be under its five-year contract renewal from 2010 to 2014 and said it was still possible for him to pay his outstanding balance in full and sign the renewal.
Morrison's company was immediately able to obtain commitments for financing as a result and has been ready ever since to pay the City the $327,875 in full and to sign its five-year contract renewal.
Morrison's company has always met its financial obligations to the City on time and in full through seven permits, two contracts and three RFP's over 14 years before this issue came up.
Morrison said he hopes that Councillors, who will not be allowed to meet with him or talk to him, will see how unreasonable and unfair the process has been for him and his company over the last six months and that they will do the fair and just thing in Council on Wednesday.
